US Treasury seeks secondary sanctions tool to go after crypto exchanges

The U.S. Treasury is pushing for more authority to tackle the growing misuse of crypto by Iran, Russia, and North Korea.

According to a report from Bloomberg, Deputy Secretary Adewale Adeyemo emphasized in written testimony ahead of a Senate hearing that the government is confronting challenges posed by malicious actors who are “increasingly finding ways to hide their identities and move resources using virtual currency.”

Adeyemo highlighted that terrorist groups and other such actors are seeking “new ways to move their resources” in response to efforts to restrict their access to traditional financial systems. He pointed out that over the past year, Iran’s Quds Force — a branch of Iran’s military — utilized crypto to finance militant terrorist groups like Hamas and the Palestinian Islamic Jihad in Gaza. Additionally, he mentioned that other state actors, including North Korea and Russia, are also turning to crypto to circumvent sanctions.

“A new secondary sanctions tool would help Treasury to evolve its targeting capabilities and would account for the technological changes that have rendered highly effective tools in traditional payments contexts less effective against virtual currencies.”

Adewale O. Adeyemo

While specifics regarding the secondary sanctions tool remain unclear, it is understood that the U.S. Treasury aims to target overseas crypto exchanges that may pose threats to national security while leveraging the U.S. financial system.

As crypto.news reported earlier, U.S. authorities are investigating transactions exceeding $20 billion that passed through the Russian-sanctioned crypto exchange Garantex. These transactions, facilitated using the Tether (USDT) stablecoin, have come under scrutiny due to concerns over potential breaches of sanctions against Russia. However, it remains uncertain whether the U.S. Treasury intends to seek additional sanctions powers to address Garantex’s counterparties.